Image: Tan Wei Te
Growing up, you probably heard your parents say things like “We can’t aff ord that” or “Go ask your dad for money”. Little did you realise that these phrases would form your views about money today.
Beliefs beget habits.
Overspending, taking wild financial risks and avoiding discussions about money are all habits that reflect unhealthy money beliefs we acquired in our early years. Roy Walker, principal consultant at IPP Financial Advisers, says that our parents very likely influenced these views.
The good news: you can “unlearn” the negative perceptions of money you were raised with.
You grew up hearing: “I’ll give you $500 if you pass your exams”
The message you got: “The harder I work, the more money I’ll have”
How this has affected you: You equate working hard with having money, but are ignorant of other ways to grow your wealth, like investing or buying financial products.
Change your money fate: No need to work yourself to the bone just to feel financially secure, says Daniel Tan, a certified financial planner. You can make your money work for you too. Speak to a financial planner about investment options, and work with her to come up with a retirement savings plan. Or, invest in an asset that can generate passive income, such as a property you can rent out. You can also ask your bank manager to recommend the best financial products for you.
You grew up hearing: “Go ask your dad for money”
The message you got: “Men are better with money”
How this has affected you: You are ignorant about money and feel powerless over your financial affairs. You tend to leave bill payments and investments to your husband.
Change your money fate: Seize control of your money. Look over your bank statements and do a financial “audit” each week where you figure out all your bills and become more familiar with your income and expenses. You might also want to do fortnightly check-ins with your husband about the finances. Discuss the household expenses, his earnings and savings, and your joint financial goals.
You grew up hearing: “Don’t buy unnecessary things”
The message you got: “Don’t spend or you might go bankrupt”
How this has affected you: You’re afraid to spend even if you can aff ord to and think that investing will send you to the poorhouse.
Change you money fate: You have nothing to fear if you have a sound financial plan, says Alfred Chia, CEO of financial advisory firm Singcapital. Alfred tells his clients to follow the 4-3-2-1 rule: Allocate no more than 40 per cent of your monthly income to paying off your loans, 30 per cent to your expenses, including bills and treats, 20 per cent to investments or your nest egg, and 10 per cent to insurance, a form of savings. Once you see that the odd splurge won’t ruin you, you’ll feel much better.
You grew up hearing: “Here’s some more money – but don’t tell your mum”
The message you got: “It’s okay to keep money secrets”
How this has affected you: You’re not open about your finances with your husband. You hide your shopping bags from him and lie about how much you spend. He doesn’t know about your credit card debt or separate banking account.
Change you money fate: If you are in debt, come clean before he loses trust in you. Discuss things openly over a nice dinner when you’re both relaxed. Alternatively, an independent financial adviser can help both of you uncover each other’s spending patterns and suggest ways to strengthen your financial situation.
You grew up hearing: “If you’ve got it, flaunt it”
The message you got: “Expensive things show that you’re successful”
How this has affected you: You splurge on big-ticket items, because, hey, you’ve made it. But you’re living from pay cheque to pay cheque just to clear your debts as you continue to keep up with other “successful” people around you.
Change your money fate: Real wealth is not measured by what you own, but by your net worth. So think cash, not cars. Alfred suggests creating a budget for yourself so that you don’t spend beyond your means. Focus on your needs instead of wants. Work on clearing your debts first, then turn your attention towards your cash savings.
This story was first published in HerWorld Magazine January 2014.